Understanding the U.S. privately placed debt market

22 Nov 2016

By Brad Ritter & Alexander Alston, Macquarie Fixed Income and Currency

As investors worldwide continue their search for yield in a global environment increasingly marked by negative interest rates, one smaller but important niche of the fixed income market is drawing increasing attention: private placement bonds.

U.S. private placement (USPP) debt is one segment of this privately issued market. USPP debt is viewed as an opportunity for certain institutional investors such as life insurance companies and pension funds because of a number of key features. These features include a yield premium for perceived illiquidity of assets and structural benefits such as covenant protections that are typically built into each debt agreement.

As a result, USPP debt can be, for certain investors, a potentially meaningful supplement to existing fixed income strategies. An in-depth overview can be found in The U.S. privately placed debt market paper.

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